The Families First Coronavirus Response Act signed by the President requires certain employers to provide paid and unpaid leave related to the coronavirus pandemic and provides tax credits to fully reimburse employers for any paid leave. The provisions discussed below will be effective on April 1, 2020.
Family and medical leave. Employers with fewer than 500 employees are required to provide both paid and unpaid public health emergency leave to certain employees through December 31, 2020. Covered employees are those that have been employed for at least 30 days and are unable to work or telework due to a need for leave to care for a child under age 18 because of school or place of care closures. The first 10 days of leave may be, but are not required to be, unpaid and then paid leave is required. The required amount to be paid is not less than two-thirds of an employee's regular rate of pay and the number of hours the employee would otherwise have been normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate. A tax credit, discussed below, is available to reimburse employers for this payment.
Emergency paid sick time. Private employers with fewer than 500 employees and public employers of any size, must provide 80 hours of paid sick time to full-time employees who are unable to work or telework for specific virus-related reasons. Part-time workers are entitled to sick time based on their average hours worked over a 2-week period. All employees are covered regardless of their length of employment. Employees who are (1) subject to quarantine or an isolation order, (2) advised by a health provider to self-quarantine, or (3) experiencing symptoms and seeking diagnosis must be compensated at their regular rate of pay, up to $511 per day ($5,110 total). Employees caring for an individual described in category (1), (2), or (3), caring for a child whose school or care provider is unavailable, or experiencing "substantially similar conditions" must receive two-thirds of their regular pay rate, up to a maximum of $200 per day ($2,000 total). Employees with fewer than 50 employees can apply for exemption when the payments would threaten the viability of the business.
Social security taxes. Paid family and medical leave and emergency paid sick time are not subject to employer social security taxes (6.2%); however, they are subject to Medicare tax withholding (1.45%).
Employer tax credits. The act provides for tax credits that can be used to reduce employer payroll tax deposits in an amount equal to the actual paid leave within the above limits plus employer's payroll taxes.
Employers that have one or more employees who are unable to work because of child care related to school or provider closures, a quarantine order, or are experiencing symptoms and have sought a diagnosis whether for themselves or others should continue to pay the worker within the established limits beginning April 1, 2020.
Clients should inform us of any payments made to employees so we have properly calculate checks and compute the credit.
Edits: 3/26/20; The actual effective date of the act was added. 3/30/20; The required poster was added.
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